"The average rate for a 30-year conforming loan stood at 6.66% on Thursday, slightly higher than the previous week as markets reacted to inflation concerns and conflict in Iran that pushed oil prices upward. Even under Warsh, geopolitical turmoil has muddied the water in regard to future rate cuts. We obviously hope he lowers rates, but the short-term, overnight Fed rate doesn't exactly directly affect mortgage rates it sort of has a peripheral effect, he said."
"The President has been yelling at Powell to lower rates. He hasn't done it. I assume Warsh is going to lower rates, but now I think it'll probably be delayed. That's because the Iranian conflict has obviously created some inflation. Last month, the [Consumer Price Index] was high, and that's aggravating, but what can we do? HousingWire Lead Analyst Logan Mohtashami agreed that Warsh is widely expected to resist additional upward pressure on rates."
"Regarding rates in the future, mortgage rates were trending below 6.25% before the [conflict in Iran] started. Once that ends and oil prices fall again, getting the rate back to the low 6% or high 5% range is in play again. Still, Mohtashami cautioned agents against expecting a return to ultra-low mortgage rates. It's really hard to get mortgage rates below 5.75% with the Fed in a neutral stance and mortgage spreads above normal, he said."
"However, mortgage spreads being near normal again means it's hard for rates to get above 7%. For agents, that could mean operating in a market defined less by dramatic swings and more by a narrower range of borrowing costs that consumers"
The average rate for a 30-year conforming loan was 6.66%, slightly higher than the prior week. Markets reacted to inflation concerns and conflict in Iran, which pushed oil prices upward. Geopolitical turmoil has made the timing of future rate cuts less clear. The overnight Fed rate has only a peripheral effect on mortgage rates, even when political pressure is applied. Warsh is expected to resist upward pressure on rates, but additional inflation from recent CPI readings could delay cuts. Mortgage rates had been trending below 6.25% before the Iran conflict, and lower oil prices could help rates move back toward the low 6% or high 5% range. Ultra-low rates below 5.75% are difficult with the Fed neutral and mortgage spreads above normal, while near-normal spreads limit rates from rising above 7%.
Read at www.housingwire.com
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